5 Best Foreign Stocks to Buy Now

4. Canadian Pacific Railway Limited (NYSE:CP)

Number of Hedge Fund Holders: 41

Canadian Pacific Railway Limited (NYSE:CP) is a leading Canadian railroad whose stock price has rallied from around $14 at the beginning of 2012 to $82.35 as of December 4. Billionaire Bill Ackman commented on Canadian Pacific Railway Limited (NYSE:CP) in a June 2022 investor letter,

CP is a high-quality, inflation-protected business led by a best-in-class management team that operates in an oligopolistic industry with significant barriers to entry. With an improving volume and pricing outlook combined with the upcoming transformational acquisition of Kansas City Southern (“KCS”), we believe that CP’s prospects are bright.

CP reported revenue growth of 7% in the second quarter as pricing and mix, fuel surcharge pass-throughs and foreign exchange more than offset a small decline in volumes. CP is leveraging the strong pricing environment to renew contracts at an average price increase of over 6%. Pricing directly benefits earnings as rails pass on increases in fuel and other expenses to customers through contractual fuel surcharges and CPI escalators. In addition to earnings growth, high inflation should help rail transportation take share from trucking and lead to incremental volume growth over time. Customers are choosing cheaper transportation solutions as prices rise, and CP’s mission-critical rail service is often the cheapest or only viable method for transporting heavy freight over long distances. High fuel prices and wage gains also disproportionally increase the cost of trucking, which is up to three times less fuel efficient and much more labor intensive than rail transportation.

Canadian Pacific Railway Limited (NYSE:CP) shares are up 14.5% year to date in 2022.